The government is considering raising the tax rate on labor income. Explain the supply-side effects of such an action and use appropriate graphs to show the directions of change, not exact magnitudes. What will happen to:
The supply of labor and why?
The demand for labor and why?
Equilibrium employment and why?
The equilibrium before-tax wage rate and why?
The equilibrium after-tax wage rate and why?
Potential GDP?
Explain your response with specifics and provide examples.
In your replies:
Share past experiences that may relate to your peers’ responses.
If you found any of your peers’ tips or ideas useful, share them and explain why you might use them yourself in the future.
Provide any input that may be useful in your peers’ initial post.
Cite and reference sources according to APA Style.
